- ASIC seeks High Court approval to appeal a ruling favoring Block Earner in an ongoing dispute over crypto yield products.
- The appeal targets the legal classification of crypto products that offer fixed or variable interest returns.
- The Federal Court previously found that Block Earner’s fixed-yield product did not count as a “financial product” under Australian law.
- ASIC says clarification is needed since the issue may impact regulation of both crypto and traditional financial services.
- Block Earner has stopped offering the disputed product and says it has no plans to relaunch it.
Australia’s corporate regulator, ASIC, is asking the High Court for special permission to appeal a recent ruling that sided with Block Earner, a digital asset company, in a dispute over how crypto yield products are regulated. The case centers on whether certain crypto products that allow users to earn interest or convert assets should follow existing laws for financial products.
ASIC stated in a media release that the “definition of financial product was drafted in a broad and technology-neutral way,” and explained, “This clarification is important as it applies to all financial products and services, whether they involve crypto-assets or not.”
The move comes after a Full Federal Court ruling in April overturned earlier findings against Block Earner for offering its “Earner” product without a financial services license. The court decided that this fixed-yield crypto product did not qualify as a financial product under current law.
In a previous Federal Court decision in February 2024, Block Earner was found to have operated without a license while offering the “Earner” product between March and November 2022. However, the court dismissed ASIC’s claims regarding Block Earner’s other variable-yield product, known as “Access,” and relieved the company of penalties in June.
Both ASIC and Block Earner appealed the rulings, leading to the Full Federal Court’s final decision this April. Block Earner, owned by Web3 Ventures Pty Ltd, has since halted its fixed-yield product and said it will not restart the offering. The company’s CEO, Charlie Karaboga, stated in April, “From the outset, we sought to ensure that our modern product suite could fit into a less-modern regulatory environment.” According to Block Earner, the product only allowed customers to loan out crypto assets at set interest rates without pooling their funds or exposing them to business risk.
The High Court has not yet announced whether it will hear ASIC’s application. Decrypt has requested comment from Block Earner.
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